Stubborn poverty in the US, too

September is the month when the US Census Bureau reports the official poverty statistics for the previous year. Last Tuesday, it gave out the disappointing news that there was no improvement in household incomes and the proportion in poverty in 2012 compared to 2011. Reuters reported that “U.S. poverty rises despite economic recovery,” to contrast the stubbornness of American poverty with the gain of 16 percent in Standard & Poor’s 500 index from last year.

The Census Bureau covered incomes of the year 2012 in its Current Population Survey, Annual Social and Economic Supplement, last March. The survey took a very large sample, of some 100,000 addresses from the 50 states and the District of Columbia. It did not include homeless households, i.e., those without an address, for technical reasons. It observed money income before paying taxes, and without the value of noncash benefits from government or employers.

It found median household income at $51,017 in 2012, or statistically the same as the $51,100 in 2011. This followed two consecutive annual declines. Indeed, 2012 was no better than 1995; the gains in between, particularly in 1999 and 2007, had frittered away.

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Poor Americans were 15.0 percent of the population in both 2012 and 2011. So, due to population growth, the absolute number of poor people went from 46.2 million in 2011 to 46.5 million in 2012.

Poverty is officially defined as being below a poverty line of $23,492 for an average family of four as of 2012. This line is adjusted for inflation each year. Dollar amounts in the report are all in 2012 values.

The official poverty line is much less than what Americans say they need, in opinion polls. Since the 1930s, the Gallup Organization has asked the question “What is the smallest amount of money a family of four needs to make each year to get by in your community?” Its latest median response is $50,000, as of April 2013, or more than double the federal government’s poverty threshold.

When the US official annual poverty series started in 1959, 22.4 percent were poor. Poverty steadily declined, going to a record low 11.1 percent in 1973, and stayed at just over 11 percent until 1979. The 1960s and 1970s were favorable times. The poverty rate had peaks of 15.2 in 1983 and 15.1 in 1993; it improved to 11-12 in 1998-2007, another relatively good period. Then it rose again, and has been flat at 15 since 2009.

Poverty is a dynamic phenomenon in the United States, as much as in the Philippines. The Census Bureau’s separate Survey of Income and Program Participation observed a panel of households in the three-year period 2009-2011, and found that 31.6 percent of the population had at least one spell of poverty lasting two or more months. Thus, transitory poverty is common.

Last Sept. 12, the Gallup Organization reported: “More Americans struggle to afford food.” Of those it polled in August 2013, 20.0 percent affirmed that there had been times in the past 12 months when they did not have enough money to buy food their family needed. This was up from 17.7 percent in June 2013, and was the highest since October 2011. This monthly survey that started in January 2008 has seen those struggling for food moving between 16.2 and 20.4 percent. This suggests to Gallup that the economic recovery is disproportionately benefiting upper-income Americans.

The US Census Bureau also found drastic widening of income inequality. In 2012 the annual household income of the top 10 percent was at least $146,000, while that of the bottom 10 percent was at most $12,236. Back in 1993, top decile income was at least $127,903, while bottom decile income was at most $12,027—so the top added $18,097 or more, whereas the bottom added $109 or less.

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Hunger might increase some more. As published by the Bureau of Agricultural Statistics, the peso prices of Regular Milled Rice per kg in the four weeks of July 2013 were, successively, 32.86, 33.32, 33.67, and 33.92. Then, in the five weeks of August, they became, successively, 34.12, 34.43, 34.75, 35.07, and 35.72. For the first week of September, the preliminary average price was 36.21, i.e., the price rose by 10.2 percent from early July to early September.

Compared to the average of 32.50 in the first week of September 2012, this year’s price is up by 11.4 percent, with most of the hike happening only in the last nine weeks! Meanwhile, the rice price per metric ton in Thailand fell from $538 last July to $504 this August (indexmundi), or only P22 per kg at a 44:1 exchange rate.

The threat to our food security would cease if rice importation were not legally monopolized by the National Food Authority, and if private imports, when authorized, were not subjected to an atrocious 50-percent tariff (from which NFA is exempt). NFA’s mandate should be limited to carrying buffer stocks and distributing them in emergencies.

“The root cause of the rice sector’s problems is the NFA’s monopoly of international trade of rice,” says Dr. Bruce Tolentino, deputy director general of the International Rice Research Institute (in his “Stymied reform in rice marketing in the Philippines, 1980-2009,” with Beulah de la Peña, in the book “Built on dreams, grounded on reality: economic policy reforms in the Philippines,” The Asia Foundation, 2011).

The monopoly is anticonsumer, and only benefits NFA’s business clients. It has been the source of gargantuan corruption. It should be abolished.